Technology is an important foundation for most successful economies, and Hong Kong may want to carve out a niche in the related sectors. But without much of a hi-tech industry, it faces an uphill battle against some of its neighbours.
Insight page, May 23
Most people have forgotten it (and quite rightly so) but we had a nascent hi-tech sector in the early 1980s. Names such as Atlas Industries, Conic Industrial and Elec & Eltek come to mind, all basing themselves out of Hong Kong because they did not see much happening across the border.
I involved myself quite closely with them for a period, hoping to build a niche speciality in coming industrial names on the stock market. Vain hope. It was not just the industrial emergence of Guangdong that killed them off. They did a mighty fine job of it all on their own.
An insight into their greatest weakness revealed itself to me one evening when I had arranged to host a dinner for a visiting fund manager from the United States, a refined and intelligent woman, with a representative of Conic Industrial.
The man from Conic came late and had launched himself straight into the soup course when the fund manager asked him: "And what do you do at Conic, Mr Lau?"
Came the answer: "Slurp, I'm the financial engineer, slurp, I manage the share price, slurp."
If investors were willing to pay six times book because of bit of accounting jiggery had made it seem that the stock was priced at only seven times earnings then Hong Kong's opportunists saw an opportunity and it wasn't industrial. One set of sharks sold out entirely within just weeks of listing their stock.
Hong Kong's strengths lie in trading and corporate services and all their many facets. A Hong Kong industrialist is someone who interposes a processing stage somewhere in his trading business, no more. The only exception I ever saw was Johnson Electric and it is actually a Taiwanese firm.
The other thing that quickly became apparent to me about hi-tech in that early 1980s period is that it was all hi-risk and lo-profit and I have never seen anything to make me change my opinion on that score. For every Steve Jobs there are a thousand bad jobs for investors in hi-tech.
I think this is in part because governments everywhere are as in love with hi-tech as they once were with owning airlines, and similarly ready to pump endless money into losers as long as they offer some glitz. You just cannot compete with this delusion if you want a return on your money. Best stay out.
Singapore is a prime example here, as World No1 in hi-tech output, according to something called the Global Innovation Index. Now go ask anyone in the know in Singapore about Chartered Semiconductor. Ouch! Ow! Doc, we need painkillers here.
But we are obviously headed to the school of hard knocks to learn this lesson again. The chief executive is all gung-ho on setting up a technology bureau because he visited Sweden (you figure the connection, I can't) and the bureaucrats are now calling loudly for more public money for hi-tech.
Don't we already have the lessons of Cyberport and Science Park to show us that it's a waste? I occasionally do a partial rundown in this column of the tenant names at these government-funded dormitories, starting at any random letter of the alphabet and seeing how many have anything really innovative going.
I have yet to find that more than a fifth have anything to do with the leading edge of technology. They are mostly sales and distribution offices for foreign brand names, all chortling at the cheap rents they can get for inserting a "tech" word in their corporate names.
And what can pass for hi-tech among these tenant names rarely amounts to more than an app writer for mobile phones, a species of here-today-gone-tomorrow promoter.
It is simply not true that technology is a foundation for successful economies and we are not very good at it anyway in this town. We have done spectacularly well as a trading and financing entrepot and we should stick to what we do best.